· Great year for aerospace and defence industry as brand values grow by more than 20% on average

The top aerospace and defence brands benefited from a strong year, with all but one of the top 25 brands recording increases in their brand value, according to a new report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Brands in the sector grew by an average of 22% between 2017 and 2018, much faster than in other industries. The league table has also seen three new entrants, including AviChina (brand value at US$0.9 billion) – the first ever representative of its country to enter the Brand Finance Aerospace & Defence 25 ranking.

Savio D’Souza, Director, Brand Finance, commented:

“This was a great year for aerospace and defence brands with a strong commercial jet market and increased planned defence spending in both the USA and globally. The brands are growing bigger and are building up capacity for expansion, as is the case with UTC taking over Rockwell Collins and with Boeing’s new deal with Embraer. Across the sector, we have seen steady growth, yet the balance of power remains very much the same as few brands in the league table change ranks. Time will show if Chinese competition will be able to challenge incumbent leaders.”

Boeing brand soars

Boeing’s performance (brand value up 22% to US$19.9 billion) cemented the brand at the top of the industry ranking, slightly increasing the lead ahead of Airbus (up 19% to US$11.0 billion).

2017 was a good year for new commercial aircraft sales, with Boeing passing the 1,000-order mark for the 787 Dreamliner and securing a US$15.1 billion 40 aircraft deal with the UAE. Production of the twin-aisle 777x commenced in December last year. A new joint venture with Brazil’s Embraer (up 4% to US$1.0 billion) will further increase Boeing’s passenger jet making capabilities.

Whilst Boeing and Airbus have gone head-to-head in commercial aircraft for a few years, Boeing has traditionally fared better in defence, securing many US Air Force, Navy and NASA contracts. Other American brands, known for their defence services more than Boeing, each posted modest but solid gains, including Lockheed Martin (up 9% to US$8.3 billion), General Dynamics (up 5% to US$4.7 billion), and Northrop Grumman (up 10% to US$4.5 billion).

Safran jumps rungs

French brand Safran (up 33% to US$4.3 billion) enjoyed the biggest brand value growth amongst the top ten brands in the 2018 ranking, coinciding with their announcement of an acquisition of Zodiac Aerospace. The merger, which will create the world’s third-largest aviation supplier, was approved by the European Commission, and is likely to drive increased revenue growth in coming years, leading to a significant increase in their 2018 brand value.

Rockwell Collins sees record growth

Further down the leader board, Rockwell Collins (up 112% to US$1.8 billion) more than doubled its brand value, becoming the industry’s fastest-growing brand of 2018. The brand has had an extremely strong year, with Rockwell Collins’ total revenue rising to a record US$6.8 billion. In addition, it has been increasingly able to extend its brand into new services by an aggressive M&A program, including its acquisition of B/E Aerospace last year. It is now being acquired by United Technologies (up 14% to US$3.4 billion) and the new ownership structure is bound to have an even more transformative impact on the brand.

Every year, leading independent brand valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 10 most valuable chemicals brands are included in the Brand Finance Aerospace & Defence 25 league table.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is assessed through a balanced scorecard of factors (such as marketing investment, stakeholder equity, and business performance) and used to determine what proportion of a business’s revenue is contributed by the brand.

Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.

Media Contacts

Konrad Jagodzinski

Communications Director

T: +44 (0)2073 899 400

M: +44 (0)7508 304 782

k.jagodzinski@brandfinance.com

Sehr Sarwar

Communications Manager

T: +44 (0)2073 899 400

M: +44 (0)7966 963 669

s.sarwar@brandfinance.com

About Brand Finance Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.

Brand StrengthBrand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Brand Valuation ApproachBrand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.